Mar

The ethics of clinical guidelines

Posted by Joe Paduda on Tuesday, March 9th, 2010 | Comments

Next month I’m going to be speaking at the Geisinger Clinic on the subject of Comparative Effectiveness – the payer’s ethical dilemma. I’m fascinated by this issue as it strikes at the heart of the problems with, and perhaps solutions for, the health insurance crisis.
If we are to solve the access and cost problem, payers, providers, and patients must be comfortable with the decision process and methodology. Today, there’s precious little ‘comfort’ with the current ‘system’. And that’s understandable.
There’s a lot of ‘art’ in medicine; physicians diagnose conditions and recommend specific treatments based on what they think will help, often without much in the way of peer-reviewed research supporting their views. Much is based on their own training and experience and the knowledge passed on to them by their medical school professors and colleagues, provided in specialty society and other medical journals, passed on by medical device and pharmaceutical firms, and learned at conferences and symposia.
Most of the time this knowledge delivers the ‘right’ outcome; the patient gets better. But in some instances there are at least a couple different treatment options for the patient’s condition. Physicians recommend what they think will work based on the patient’s unique characteristics (physical, emotional, financial, history), and these ‘recommendations’ may be several. For example, chronic lower back pain treatment options may include surgery, physical therapy, medications, some of the above, all of the above, and variations of each of the above.
Sticking with the back pain issue, think of this from the payer’s perspective. The wide variation in back surgery rates is well-documented, with Medicare data indicating a 500% variation between Ft Myers and Miami Florida. We don’t know why there’s such a wide difference, but it is safe to assume that the rate is too high in Ft Myers, too low in Miami, or perhaps both.
When a physician in Ft Myers recommends surgery for a patient with a back condition, it is understandable why payers would have concern over the appropriateness of the procedure. To address this concern, payers utilize clinical treatment guidelines in an effort to determine if the recommendation is ‘appropriate’.
In some cases, the guidelines provide clear and convincing support for or against the procedure, but in many others the finding is not so clear cut. The patient may have some but not all of the clinical findings that are ‘necessary’ to support surgery; there may be other medical conditions present that complicate treatment determination; the patient may want one type of treatment for their own reasons.
The result is the payer – and the physician – are functioning in a somewhat grey area.
There are obvious financial factors in play as well. The physician gets paid to do the procedure, the pharma company gets paid if the patient takes their meds, the device company gains revenue for each device sold, the payer saves money if expensive procedures aren’t performed, the patient may want drugs for inappropriate reasons.
The ethical issues are apparent. While we would hope that decisions would be based solely on the evidence, there often isn’t enough of the right type of evidence to arrive at a clear cut decision. When that occurs, what other factors affect the decision? How are disagreements resolved, and what is that resolution? When there’s strong disagreement, what factors, evidence, criteria are ‘used’ to support the parties’ different positions?
If you have experience with situations that speak to this ethical dilemma, I’d appreciate hearing from you.

Mar

Health reform will fail

Posted by Joe Paduda on Friday, March 5th, 2010 | Comments

As presently conceived, health reform will fail. I’m talking not about the chances of a bill being signed into law but rather what happens when that happy day arrives.
I say this with deep regret, as I am an ardent advocate for health reform and a strong supporter of the President.
But we cannot force people of limited means to buy coverage they can’t afford, and we cannot force insurers to take all comers if people can opt out whenever they wish.
Without cost control, insurance costs won’t moderate, and without lower health insurance costs, many Americans can’t afford coverage. Despite the efforts of many, this seemingly-obvious conclusion hasn’t affected legislative efforts. Democrats are desperately trying to ram thru a huge entitlement expansion during a deep recession, while Republicans gleefully distort and demagogue, much more interested in helping the Dems commit political suicide than actually solve the health insurance crisis.
Over the last decade health insurance costs went up 131%; an annual rate of 8.7%.
If we are able to keep inflation to only 8.7% (doubtful in my mind), a family will pay $30,800 for insurance in 2019,
That inflation rate will moderate somewhat if everyone is covered (less need for cost shifting), but we’re still stuck with the prospect of forcing nursing aides making $12 an hour to buy coverage that they can’t afford.
To date private insurers have shown no ability to control costs; they’re too worried about on a reprise of the ‘managed care backlash’ of the nineteen-nineties when they should be thinking about the prospect of single-payer, a prospect that will look increasingly likely as health insurance costs approach $30,000 per family.
What does this mean for you?
There’s a lot of opportunities here for innovative, intelligent, creative approaches to coverage. Insurers and employers will have to leave their comfort zones and try solutions that will make them nervous, but the ones who do stand a much better chance of surviving than their conservative competitors.

Mar

What’s the future of health reform? Brad knows…

Posted by Joe Paduda on Thursday, March 4th, 2010 | Comments

Health reform is kabuki theater – indeed. Brad Wright does a terrific job of finding the parallels and cutting thru the blather to focus on the whys, whos, and whens in the latest edition of Health Wonk Review.
Here’s Brad’s lead:
“Kabuki theater is a Japanese dramatic art form known for its elaborate costumes, make-up, and over-the-top performances.”
the parallels are striking!

Mar

Texas’ efforts to add science to the art of work comp medicine

Posted by Joe Paduda on Thursday, March 4th, 2010 | Comments

As anyone who has studied physician practice patterns is only too aware, there is wide variation in how physicians practice; the kinds of tests they order, whether they admit patients to the hospital or treat on an outpatient basis, the drugs they prescribe and the outcomes they deliver.
If we are to gain control over health care costs and ensure patients receive the right treatment and payers get value for their dollars, we have to force more science into the art of medicine.
Texas’ Division of Workers Comp’s push to publish data [sub req] on work comp physicians’ compliance with clinical guidelines is a step in the right direction. While only in the formative stage, and pretty limited at that, the effort is long overdue but nonetheless a critical step in reforming the dysfunctional mess that is our health care system.
Unlike any other good or service, when employers ‘buy’ health care they have no idea of what that investment returns; they don’t know what they get for their dollars. When an automobile manufacturer buys tires, it makes its decision on which tires it buys based on the performance of those tires, their durability, ability to carry the car’s weight, handling, cost, and value compared to other tires on the market.
That same auto manufacturer has no idea what it gets when it spends millions on health care. What is the return on investment on the premiums paid and the services bought with its dollars? How does it measure the value of the office visit, the return on the MRI, the 30 day supply of medication?
Because employers don’t know and can’t measure the return on their medical spend, they focus on spending as little as possible – they have to provide health and workers comp insurance, but want to spend as few dollars as they can because there’s no way to know what the return is on that investment.
Which is why Texas’ efforts are so important. While one can (and I’m sure some will) argue that they are starting too small, (WorkCompCentral reports that one recommendation is to begin looking “at compliance by doctors with treatment guidelines in ordering MRIs for back and spine injuries”), it is far more beneficial for all concerned to begin the effort, to engage providers, payers, regulators, and claimant advocates than to wait till there’s broad consensus on multiple performance measures.
What’s great about workers’ comp is that unlike group health or medicare or medicaid, the same dataset includes information about return to work, the cost and duration of disability, and the final ‘functional’ outcome (I’ll concede that these data aren’t always accurate or consistent). When we’re evaluating medical care, the ultimate outcome should always be based on the degree to which the patient recovered and returned to functionality.
What does this mean for you?
Do not let the perfect be the enemy of the good – encourage Texas’ DWC to proceed quickly with their initial efforts, engage with them in a positive way, share data, and push for more measures, more results, more openness. Understand that physicians have concerns about outcomes, many of them legitimate, and work with them wherever possible.

Mar

Medicare physician fees: the Senate kicks the can further down the road

Posted by Joe Paduda on Wednesday, March 3rd, 2010 | Comments

Yesterday the Senate passed a bill extending unemployment and other benefits and subsidies for another month; one of the less well known provisions prevented imposition of a 21% cut in Meducare physician reimbursement.
‘Prevented’ isn’t exactly correct; the bill merely delayed implementation of the cuts till the end of March.
For years Congress has avoided implementing Medicare reimbursement decreases, bowing to intense lobbying by physian groups and other parties outraged at the very idea that their income will be reduced. I can’t really blame the docs; as I’ve reported here in the past physician income, especially generalist physician income, has not kept pace with inflation for several years.
What I’m less impressed with is the failure of physician advocacy groups to offer a reasonable alternative to the present fee-for-service system. Anyone with a clue acknowledges that FFS is one of the biggest problems in our health care system, rewarding providers for doing things to patients and not for keeping them healthy.
At some point we have to – must – adopt reimbursement methodologies that reward results not activity.
Don’t expect this to happen before the end of March. No, we’re much more likely to see the Senate boot this can once again, and with it the chance to fix a fundamental problem with our health care system.

Mar

Washington politics will hit workers comp

Posted by Joe Paduda on Tuesday, March 2nd, 2010 | Comments

The political grandstanding and point scoring on Capitol Hill will have significant repercussions for work comp, with some states directly – and quickly – affected and others feeling the impact later and more subtly.
I’m refering to the inability of the Senate to pass
legislation preventing the 21% cut in Medicare physician reimbursement that went into effect yesterday.
The Senate is trying to pass legislation to (temporarily) prevent the cut but Sen Bunning (R TN) is holding up passage. I’m a bit conflicted over Bunning’s move: he’s a bit of a wild card and rather erratic, but his stated rationale isn’t unreasonable; he wants to know where the money’s going to come from.
Regardless, several states base their WC fee schedules directly on Medicare: the cut will theoretically impact physician bills for services rendered beginning yesterday and cotinuing until the impasse is resolved.
I’m actually in DC now, if nothing’s changed before I get back to the office I’ll dig out my files and report on which states are directly affected.

Mar

Be careful what you wish for: health insurance without regulation

Posted by Joe Paduda on Monday, March 1st, 2010 | Comments

An oft-repeated goal of reform opponents is their desire to ‘get the government out of health insurance’.
Let’s say they get their wish, and the vaunted free market is allowed free rein (or reign) to do as they would. What happens?
A lot and none of it good.
Insurers would be able to cancel policies when insurers have the temerity to fall ill.
Individuals with pre-existing medical conditions would not be able to get insurance to cover those conditions.
Employers with aging and/or sicker workers would find coverage language carefully crafted to exclude payment for those workers.
Insurance premiums would be lower, for those who could get coverage.
Larger employers (who tend to be self insured) would be little affected by these issues, at least initially. But over time their costs would increase as providers shift cost to them to cover the expense of treating the growing pool of uninsured.
Those with chronic conditions, the people responsible for three quarters of our health care costs, would in increasingly be on their own.
Local and state taxes would increase dramatically as governments struggle to balance commitments to their workers with protests from hard-pressed taxpayers.
Within a few years the insurance death spiral will have reached terminal status, and voters will be clamoring for any and all relief.
Will this happen? Without regulation, absolutely.
This isn’t to damn health insurers; they exist to serve their owners first and customers second. That’s not good or bad, it’s just reality.
But to hear the anti-government folk, all will be well if government just gets out of the way. Nothing could be further from the truth, and they know it.
What they really mean is government should have a lighter hand. But that’s not what they say and not what their supporters hear. These are the same supporters who would find themselves without coverage, without care, relying on charity if government wasn’t there to ensure insurers operate in a socially responsible way.
Todays version of regulation will slow down the death spiral process but will not prevent it. We are in a macro version of adverse selection; insurers are avoiding riskier individuals and employers, healthy folk are dropping coverage leaving the insured population older and sicker and more costly, and Medicaid enrollment is rapidly increasing as wages and employment stagnate.
What does this mean for you?
The only entity that can fix this is government. The free market has failed to control costs and failed miserably. The solution is apparent; change insurers’ motivations to reward them for care and cost management and not for risk avoidance.

Feb

Texas’ efforts to control WC Rx

Posted by Joe Paduda on Friday, February 26th, 2010 | Comments

In the very narrow world of work comp managed care, there’s an even skinnier slice focused on managing pharmacy. As pharma accounts for almost a fifth of all medical dollars spent in comp, its an area that certainly deserves attention – from employers, insurers, legislators and regulators.
There’s a lot going on in work comp pharmacy:
– the basis for fee schedules in 33 of the 34 states with fee schedules for comp will change within a year;
– the use of potent and potentially addictive narcotic opioids is rapidly increasing;
– price increases on brand drugs has raised the price per pill rather dramatically; and
– drug testing and the use of opioid contracts are gaining traction.
Interestingly, there’s only one state that currently has a somewhat restricted formulary in place – Washington, which actually prohibits the use of several controversial drugs for work comp claimants.
Texas has been working on a ‘closed’ formulary for a couple of years now, and has made significant progress. Basing their list of drugs on the ODG guidelines, Texas will be the first non-monopolistic state to require payers’ authorization of a number of drugs before they can be dispensed.
While the review and regulatory drafting process has taken a while, involved many parties, and required many meetings, sources indicate it is getting close to completion. The length of time it takes to get this done is not surprising, as this is new ground for regulators, payers, and clinical personnel as well.
The formulary will allow most drugs commonly used in work comp to be dispensed without any prior authorization (PA) or review (just as they are today) but a relatively few drugs will have to be specifically authorized by the payer. Among the drugs requiring a PA is my old favorite Actiq(r), a very, very expensive, very potent narcotic lollipop that is only FDA approved for breakthrough cancer pain for patients already using a narcotic opioid.
I’ve locked horns with the good folk from Texas’ DWC in the past over their managed care reporting methodologies; I’d be remiss if I didn’t applaud their efforts to address one of the most significant problems in workers comp – the inappropriate use of expensive drugs.
It isn’t just the cost of the pill that’s the issue. Patients taking narcotic opioids for extended periods are at high risk for addiction; are severely limited in their ability to return to work; and often suffer from significant and highly problematic side effects (depression, constipation, erectile dysfunction are just a few).
This is one of those issues that isn’t easy to address. Managing pain can be highly controversial, is a very patient-specific and not-well-understood aspect of medicine, and often puts physicians in a difficult position. If they don’t treat the pain as the patient desires they may be subject to sanction, but if they overtreat they may harm the patient or contribute to abuse or diversion.
Adoption of state-approved prescription medication guidelines will go a long way to helping resolve these issues, and kudos to Texas’ DWC for the thoughtful, careful way they’re going about it.

Feb

Hospitals’ strategy – survival thru cost shifting

Posted by Joe Paduda on Thursday, February 25th, 2010 | Comments

Over the next few weeks, I’m going to be writing extensively about the death spiral of the American health insurance system, a fate as certain as it is unthinkable.
As enrollment in private insurance plans declines, and the Medicaid population increases, providers will have to increasingly rely on the remaining private pay patients to cover the costs of the uninsured and, in the case of Medicaid, under-reimbursed. I’ll begin the discussion with a story that clearly illustrates the problem.
Hartford Hospital’s announcement that its primary strategic focus is to achieve a “Solid Foundation” is prima facie evidence of the future of health care – the continuation of the private insurance death spiral.
In its press release, HH says:
“Negotiating with managed care companies is one key element of Solid Foundation. In 2010, Hartford Healthcare has two more major contracts to negotiate, and these contracts have a common thread – historic underpayments from private insurance companies. Hartford Healthcare physicians and hospitals have been paid too little for too long compared to hospitals across the country with similar services and capabilities.”
That’s not to say they’re out there looking to make billions; HH is aiming for margins in the 1% – 2% range.
But in order to make those modest margins, HH is going to have to fill beds – and the data indicate the Hartford area has too many beds, which will result in higher costs without an improvement in quality of care.
Compared to New Haven, CT, [link opens the Dartmouth Atlas for New England as pdf] Hartford has 23% more excess bed capacity and hospital costs that are more than 10% higher per capita.
I don’t know if the hospitalization rate in New Haven is appropriate or not; I don’t know if the hospitalization rate in Hartford is appropriate or not. I do know that one of the two, or perhaps both, aren’t the ‘right’ rate.
Hartford Hospital is responding to its need to preserve it’s organizational existence, and therefore will push hard to raise reimbursement while filing beds, a double hit for private insurers and employers who are being ‘taxed’ to help offset declining reimbursement from CMS and an increase in the number of Connecticut citizens without health insurance.
An intelligent approach to our nation’s coming health care disaster would be to address the supply issue. Reduce the number of beds in Hartford (while I don’t know there are too many in Hartford, that’s a pretty good guess).
What does this mean for you?
Until intelligence appears in the health care reform debate, you’ll see more and more announcements like Hartford Hospital’s. While they work to solidify their financial foundation, we’ll be watching our nation’s health care system crumble.

Feb

The Anthem Wellpoint mess: the other part of the story

Posted by Joe Paduda on Wednesday, February 24th, 2010 | Comments

There’s something missing from the debate/argument/shouting surrounding Wellpont’s rate increase announcement; nowhere, in any statement I could find, did the company or it’s critics address the core issue, Wellpoint’s inability to control costs.
Isn’t that what healthplans are supposed to do? Isn’t that a core part of their reason for existence?
If they can’t control costs they aren’t much more than transaction processors and provider contract aggregators.
Wellpont did make statements about the need to raise rates to address medical inflation and an aging population; what wasn’t presente was their solution to the problem.
Why not? Doesn’t one of the largest healthplans in the nation know how to control costs?
There’s no evidence that Anthem or United or Coventry or Aetna or Humana have any ability to manage medical care such that quality is high and costs aren’t. What is evident is their ability to raise rates to stay above medical inflation.
And therein lies the problem. Health plans, health insurers, both for- and not-for-profit, haven’t controlled costs. And outside the relatively minor investments in disease management and nascent provider profiling efforts, there is no evidence they are even working hard to figure it out.
I’m having a hard time understanding how the private sector is going to solve the health insurance crisis. Truth be told, Medicare’s blunt and clumsy approaches, for all theirany problems, have been more successful than any private plan.
What does this mean for you?
When costs get unaffordable, health plans will have no one to blame but themselves if they find their role reduced to administering a single payer program.

Author: Joe Paduda